Fewer people are moving to Washoe County, and it’s most likely due to the high cost of living. That’s what two local experts are saying is being reflected in Census and home sales data.
Eugenia Larmore, president of economic consulting firm Ekay Consultants, said the market for sure had plateaued, and Brian Bonnenfant with the Center for Regional Studies at the University of Nevada said the drop in new residents is noticeable.
“When you look at the population totals for 2020, we grew 40% less than we did in 2019,” he said. “We almost reached about 8,000 new persons in 2019, and [in] 2020 we only added about 4,400 [or] 4,500.”
Home sales between August last year and August this year saw a 16% decrease.
The reason for the drop?
“I think what’s really creeping into the mix is cost of living. It has to be the cost of living,” Bonnenfont said. “We’ve been kind of watching that prior to the pandemic as our housing prices ticked up, ticked up, ticked up.”
The same goes for apartment rents.
“We were kind of expecting that this is really going to put a damper on growth and new population,” Bonnenfant added. “We’re seeing less of a migration because of our cost of living.”
He said he does not have empirical data to support the decline in new residents but said projections should have shown even more people coming into the area in the past year-and-a-half. That didn’t happen.
“This must be a big investment push by investors to come in and buy all these homes, if the bodies aren’t following,” he said. “So a lot of home sales, but [not] a lot of bodies.”
Home sales stabilizing
Home sales play a role.
Larmore said sales growth has dropped — or, rather, “we’re increasing at a decreasing rate. [We’re] definitely seeing a plateau and … in the past, a lot of the price growth was driven by unmet demand. We’re seeing [home] listings increase, but the number of sales [are declining].”
The Reno Sparks Association of Realtors’ President Gary MacDonald said the market is stabilizing.
“As prices continue to stabilize and wages in the region begin to trend upward, home ownership becomes more attainable,” he said. “It appears that the housing market in our region is moving toward improved balance.”
Larmore said the stabilization does not hint at dropping prices but that price increases will possibly be more in the 4% to 5% range versus double-digit increases the region has seen.
“We’ll catch up and make things a little more affordable or at least a little less unaffordable,” she said.
Millennials driving population trends
Most of those people moving into Washoe County are not coming from the Bay Area, but rather Clark County.
Bonnenfant said that’s because students attending the University of Nevada, Reno from the Las Vegas area. That’s to the tune of about 3,000 to 3,500 per year.
“It’s always led by Clark County, by far, and I think that has to do with UNR and getting students out of Las Vegas,” he said.
More broadly, those coming to the Reno area arrive from around the West Coast, not just California. These trends are reflected in the U.S. Census Bureau data going back about a decade.
The most recently published data show newcomers to the area arrive from Hawaii, California, Oregon, Washington, Idaho, Utah and New Mexico.
“The numbers that are coming out from the Census Bureau are really showing … conflicts within the data, what we think and feel that, you know, we’re getting invaded by California,” Bonnenfont said. “It’s more of a West Coast thing, [the] Intermountain Region. There are some 2020 numbers from Census Bureau mobility numbers that do show heavy movement [from the] West to the South.”
“We get quite a few people from the Bay Area and down south, Southern California,” she said. “But again, a lot of that is proximity, as well as any kind of economic influences.”
Wages, labor force a huge concern
Larmore predicts wages will increase, but small businesses, especially those with low profit margins, will see a negative impact from the labor shortage.
“The great news for the employees is that it’s going to start driving wages, which is great,” she said. “People making more money obviously have significantly higher economic impacts in the region, [but] on the negative side, because there always has to be a negative side, this is really going to hurt the small businesses with the lower margins.”
Wages, she added, will increase and home prices will likely continue to stabilize.
“You get to the point where the prices reach a point where … it lowers demand,” Larmore said. “People decide not to move to the area [and] the demand stagnates.”
Higher paying jobs at the TRI-Center outside of Sparks compete with jobs in town. This is why small businesses are having trouble hiring people at $15/hour when industrial jobs are paying $35/hour outside of Reno.
Bonnenfant said the problem goes much further. Construction workers are being hired from Florida and Texas to work large jobs in the Reno area.
“For us moving forward, this is a huge problem,” he said. “If you … grow these industrial parks, and let’s say you put a Nevada lithium mine up at Thacker Pass pass above Winnemucca, that’s 500 construction projects overnight, ramping up to 1000.
“They’re going to be then competing for jobs within our greater area. And so where are we going to get all these jobs?”
Bonnenfant said we could be seeing these issues through the next decade.